In the current economic environment, businesses are understandably looking to reduce overheads. But we have noticed a worrying trend where sub-contractors have reduced or even completely removed their insurance indemnity limits in a bid to cut costs – leaving main contractors and SME construction businesses exposed with a liability.

A recent example we encountered involved a liability claim involving potential site damage and injury allegations which needed to be passed to the relevant subcontractor. It was at this point that it was discovered that the sub contractors insurance had insufficient cover limits. Most construction insurance policies have a policy condition or warranty which places the burden on the insured to check their sub-contractors have sufficient cover in place. In our example case, the insured had failed to carry out that check – leaving them exposed.

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How BJP Insurance is helping clients

Naturally, we would encourage all of our construction clients to routinely carry out checks on all sub-contractors that they work with. But we also appreciate and recognise that they may not always know what questions to ask. Any BJP construction customer should speak with their account manager. We have a range of questionnaire templates that can be passed to sub contractors to confirm that they have appropriate, adequate protection in place.

BJP's Stephen Hegarty explained: "As an insurance broker specialising in the construction industry, our job is to advise and assist our clients in protecting their businesses from risk. Don't wait until you are in a claims situation. Our questionnaires are designed to ask the right questions of your sub contractors, and also stipulate that the sub contractor must inform you in the event of any changes, reductions or cancellations of cover. Effectively, they offer evidence to the insurers that you have taken reasonable steps to ensure that the right cover is in place."

The construction industry in the UK has done much to tighten up and improve health and safety standards in recent years. But it remains the case that construction sites are potentially dangerous places to be, and resultantly, the insurance industry still sees many liability insurance claims every year. The costs in defending allegations of an injury – even where it is ultimately proven to be wrong – can soon mount up. Payouts can amount to tens of thousands of pounds. BJP strongly advise that taking the time to check all paperwork of sub contractors should be a priority for construction SME's.

For more information, visit bjpinsure.com.